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Saudi Arabia's SIIG and Petrochem in merger talks

DUBAI (Reuters) - Saudi Arabian petrochemicals companies Saudi Industrial Investment Group (SIIG) 2250.SE and the National Petrochemical Company (Petrochem) 2002.SE have begun talks over a potential merger, they said on Sunday.

A deal would mark further consolidation in the Saudi petrochemicals sector after oil giant Saudi Aramco 2222.SE bought a 70% stake in Saudi Basic Industries 2010.SE in June.

The SIIG and Petrochem boards have approved initial discussions to study the feasibility of a merger but no agreement has been reached on any final structure of a merged entity, the companies said in separate statements.

SIIG owns 50% of Petrochem but the two companies are similar in size, suggesting a deal would be a merger of near equals.

The two companies had combined assets of $9.5 billion as of June, Refinitiv data shows. SIIG had total assets of 19.2 billion riyals ($5.12 billion) at the end of June while Petrochem had 16.4 billion riyals in total assets.

Petrochem, whose market capitalisation is $3.7 billion, has a larger market value than SIIG.

Shares of Petrochem were up 7.8% and SIIG was up nearly 5% in early trading.

($1 = 3.7498 riyals)

Writing by Alexander Cornwell; Editing by David Goodman

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